World’s First Bitcoin-Based Oil Market Launched - Will It Be A Success?

Every country needs US dollars if it wants to buy crude oil. This may soon change as a market selling crude oil for Bitcoin has emerged.

The term ‘petrodollar’ has been thrown around since the 1970s. Dollars for oil have been the principal source of earning for many oil producing nations in the Middle East, as well as in other parts of the world.

However lately the petrodollar has been under a considerable amount of strain. Many have predicted its imminent demise based on a multitude of reasons such as Iran wanting to be paid in Euros for its oil sales, and the Russian President Vladimir Putin trying to get his country to move away from pricing its oil in the US currency.

Yet among all of these developments perhaps the biggest alarm bell that has been ringing for the petrodollar has been the strained relationship between Saudi Arabia which is the fiefdom of the house of Saud and the United States.

A sweetheart deal gone sour

It has been the case for decades that the US and Saudi have had an understanding which involves the US protecting the House of Saud and, in return, the Saudis only pricing their oil in the US dollar.

Moreover, the Saudi Arabian currency the Riyal and several other Gulf Cooperation Council (GCC) currencies are pegged to the US dollar. This pricing of oil in dollars has made the US currency the world’s reserve currency of choice. However, things are not well between the US and Saudi Arabia of late with the Wall St. Daily reporting:

“The tension between the two countries further increased recently thanks to the passing of a bill by the Senate – the Justice Against Sponsors of Terrorism Act (JASTA) – which would allow the families of the victims of 9/11 to sue Saudi Arabia, pending the verdict as to whether any of the country’s officials were involved in the 2001 terrorist attacks.”

The same publication also reported that the Saudi’s are miffed about the US doing nothing to shore up the regime of the former Egyptian President Hosni Mubarak, who was an ally of the Saudi Kingdom.

The slump in oil prices have also hit Saudi Arabia hard. The Guardian has this to say about the Saudi economic woes:

“The Kingdom, Opec’s biggest oil exporter, is said to need $100-a-barrel oil to cover its enormous public spending commitments. The International Monetary Fund warned recently that Riyadh would burn through all its financial reserves within five years under a $50 oil price unless it took steps to raise taxes or cut spending, which it has since started to do.”

The emergence of the PetroBTC?

If through political machinations or economic necessity the US loses its coveted reserve currency tag, then what will replace the US dollar is an open question. One idea worth exploring would be a cryptocurrency like BTC.

Cointelegraph had a chance to talk with Shannon Lowery, Sr. Founder of NJUF Investments whose is being tagged as ‘Bitcoin’s First Crude Oil Market.’

Shannon is of the view that the US dollar is about to take a major hit in value and this will affect almost every major commodity and “shake major exporters.” In terms of commodity trading oil is of special significance because every country needs currently needs dollars to buy fuel. Shannon thinks that his crude oil market has the answers.

He says:

“The crude oil market is for commercial interests to prevent speculation on oil prices. All actual buyers and sellers who take delivery of crude can buy crude oil and other energy products using BTC, because the USD is about to collapse in value.”

BTC based oil trading may be more profitable

As of now only caters to the needs of governments and corporates but Shannon says that due to the impending devaluation of the dollar, commodity trading in BTC will become more profitable. This could increase retail investor participation over time.

Cointelegraph asked Shannon what was the short and long term view of his trading platform. He says:

“The short term focus is to prevent the